Despite the increasing popularity of electric vehicles that risk putting gas stations out of business, the industry still has a positive outlook. Data shows that U.S. gasoline station sales in 2021 amounted to $583.5 billion, up from $428 billion the previous year.
There are various reasons to buy a gas station business in 2023. They’re typically recession-proof, most clients are attracted to the convenience stores, and you can explore other avenues to generate more money besides selling gas.
Here’s why you should consider buying a gas station as one of your business investments.
Who Owns Gas Stations?
It is crucial that you know the ownership of a gas station before you buy it to understand what royalties you have to pay, if any, and the perks you may enjoy regarding wholesale gas prices.
Gas station owners fall into two main camps. These are franchisees and independent operators.
Franchisees pay name-brand gas refineries royalties to use their name and brand in their gas stations. The typical royalties lie between 3% to 14% of revenue.
Independent operators run generic “no-name” gas stations. Instead of sourcing the gas directly from a name-brand refinery, they source it from the open market.
Ironically, gas from the open market is often cheaper, despite coming from the same refinery as a franchise gas station. That’s because name brands have less control over pricing in the open market compared to when they’re dealing directly with a franchisee.
However, if the gas supply tightens, prices in the open market can become more expensive.
Independent operators own most gas stations.
Reasons You Should Consider Buying a Gas Station
Various reasons make gas stations a profitable business to buy. Here’re a few convincing ones.
Many Customers are Attracted to the Convenience Store
Many gas station owners agree that most of the money made by a gas station comes from the convenience store.
According to data, there were over 150,000 convenience stores in the U.S. in 2020, most independently run. Out of the almost $650 billion in sales made by the industry, more than half of it came from gas stations.
Most consumers drive into gas stations to grab various products such as sunglasses, Doritos, energy drinks, or supplies they may need for their trip.
Bathrooms and Fast Food Outlets are Popular in Gas Stations
Despite convenience stores being one of the most popular revenue drivers, clean bathrooms and fast food outlets or franchises are also significant and growing money makers.
One survey found that 22.6% of consumers who visit a gas station’s bathroom make an impulsive purchase in the convenience store.
Fast food outlets and franchises such as KFC are also popular in gas stations and drive significant traffic, posting good margins.
Customers Want Car Care Amenities in Gas Stations
As demand for convenience stores and fast food outlets increases, many customers are also being drawn to gas stations that are offering car care amenities. This includes air pressure stations, vacuums, and a car wash.
Gas stations providing car care tools like paper towels and squeegees are also experiencing rapid traffic growth. Car washes have one of the best profit margins since soap and utilities are typically the only expenses.
You Can Control Pricing as an Unbranded Station
Independently operated gas stations enjoy more price control that allows them to attract more traffic and fight the competition. Consumers will more likely stop at gas stations offering the lowest prices.
Finer control in gas pricing allows independently operated gas stations to remain appealing despite tighter prices in the open market due to inflation and new electric car laws shaping up the landscape.
Gas Stations are Still Very Profitable
Gas prices fluctuate often. Likewise, prices of products in the convenience store are also subject to frequent fluctuations. Despite that, gas stations have remained profitable, making them valuable investments in an unstable market.
The average customer will spend about $30 per visit, with most gas stations posting a combined profit margin of 10%. Also, gas stations in most locations quickly increase their traffic within a few years of opening.
Gas Station Businesses Can be Recession-Proof
Gas station businesses are mostly considered recession-proof. Despite biting inflation, demand for gas rarely fizzles out. Moreover, as commodity prices bite, more consumers turn to convenience stores instead of big-brand retailers.
Have a Professional Help You Find the Right Gas Station to Invest In
Gas stations are here to stay. They’ve proven resilient enough to fight inflation and disruptive technologies like electric cars. They are also a versatile investment that can accommodate other ventures, such as a convenience store and a car wash.
If you want to buy a business, contact a professional who’ll lead you to the right gas station in your area.
